BlackBerry losing key market - businesses

Monday

Jul 29, 2013 at 12:01 AMJul 29, 2013 at 5:26 AM

For years, the BlackBerry was the smartphone of choice among professionals seeking ironclad security features and super-fast email. But its perch at the top of the corporate and government ladder, the cornerstone of its business and perhaps its last bastion, has begun to erode. And that's raising worries among investors and analysts that BlackBerry Ltd. might be running out of time.

For years, the BlackBerry was the smartphone of choice among professionals seeking ironclad security features and super-fast email.

But its perch at the top of the corporate and government ladder, the cornerstone of its business and perhaps its last bastion, has begun to erode. And that’s raising worries among investors and analysts that BlackBerry Ltd. might be running out of time.

A slew of businesses and government agencies have abandoned BlackBerry phones in recent months, a troubling trend for a company that has been refocusing its attention on business users after watching consumers depart in droves.

“Ultimately, we are skeptical that BlackBerry can penetrate the consumer market, and its remaining enterprise-installed base is no longer large enough to drive unit sales” beyond August, Kevin Smithen, telecom analyst for the investment firm Macquarie Group Ltd., wrote to investors. “ We think the likely end game for BlackBerry is a breakup or liquidation at a lower price.”

BlackBerry’s revival efforts are being thwarted by a double whammy of workplace changes: the rise of “bring your own device to work” policies, known as

BYOD, and enterprise clients’ internal decisions to drop BlackBerrys in favor of iPhones, Android devices and even Windows Phones.

“BlackBerry management may have been underestimating the problem for quite some time,” said Scott Thompson, an analyst at FBR Capital Markets.

Analysts say BlackBerry’s enterprise business is especially important because it is more profitable than the company’s consumer segment.

Rivals that already are beating BlackBerry on the consumer side are taking notice and ramping up their efforts to woo business users — and it appears to be working.

Last year, BlackBerry for the first time shipped fewer smartphones to the commercial segment globally than Apple Inc. and Samsung Electronics Co., said the market-research firm IDC.

Several major government agencies have dumped BlackBerry devices, including the National Transportation Safety Board; U.S. Immigration and Customs Enforcement; the Bureau of Alcohol, Tobacco, Firearms and Explosives; and the National Oceanic and Atmospheric Administration.

In a report detailing its decision, the immigration and customs agency said BlackBerry and Nokia “have been relegated to laggards in the consumer market, which has made them too risky for adoption as a ‘go-to’ choice for enterprise use.” The NTSB said its BlackBerry devices “have been failing both at inopportune times and at an unacceptable rate.”

Companies also are moving on. Home Depot Inc. dropped BlackBerrys in February and instead provided executives and senior management with iPhones, a spokeswoman said. At Yahoo Inc., CEO Marissa Mayer rolled out a new smartphone program last fall that allowed employees to choose from several devices including the iPhone and the Samsung Galaxy S3; BlackBerry devices were left off the list.

The departures of major companies and agencies are worrisome for the Canadian smartphone maker as it tries to turn itself around. Analysts say companies’ cost-cutting measures are partly to blame: Businesses save money by having employees bring their own devices to work, and getting rid of BlackBerrys also eliminates fees associated with using the company’s software.

Many people had hoped the rollout of the BlackBerry 10 operating system, lauded for several business-friendly features, including its smooth transition between work and personal profiles, would help. But analysts say the devices don’t appear to be selling as well as expected.

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